UK Personal Finance

Credit rating agency Fitch have released figures that show 20% of the UK house prices are overvalued, this is compared to the long term average.  Over the past decade house prices have sky rocketed away from incomes.  The UK economy has been made vulnerable to the higher interest rates, due to the high levels of debt.  The UK was ranked third most sensitive to the rise in interest rates out of the 16 countries that were examined.

Economic indicators where used to see if house prices where overvalued and which of the 16 countries examined would be at risk over the rise in interest rates; also Fitch looked at the type of Mortgages that were dominating the market.  Fitch explained that variable rate Mortgages are in vogue, (an example of a country with this would be the UK) would be hit harder by the rising interest rates.  The top 5 most vulnerable countries consist of, New Zealand,  Denmark, United Kingdom, Norway and Sweden.  The top two of these countries, have both have booming houses prices and high levels of personal debt.  Italy, Germany and Japan were all less likely to be hit by the rise in interest rates and debt becoming harder to manage; this is because many consumers have not seen house prices or debt race away to the same extent as the UK.

On Monday The Bank of England explained that UK Mortgage lending had risen in June, which has started to indicate housing market growth.  The total lending has rose by £9.6bn in June, from £8.7bn in May.  114,000 new homeowner loans were give the go ahead, even with the number of Mortgages approved stayed the same in June.  George Buckley from Deutsche Bank explained that, the mortgage lending was holding well against the rise in interest rates robust mortgage approvals, the numbers would weaken toward the end of 2007.